Here's Why Landstar (LSTR) Stock Should Grace Your Portfolio

Shares of Landstar System (NASDAQ:LSTR) LSTR have been displaying an uptrend, having gained 28.2% in the past six months compared with the 26.8% appreciation of its industry.

Let’s look into the factors that are working in favor of this currently Zacks Rank #1 (Strong Buy) stock. You can see the complete list of today's Zacks #1 Rank stocks here.

Northward Earnings Estimates: The Zacks Consensus Estimate for current-quarter earnings has been revised 41.3% upward over the past 60 days. For 2021, the consensus mark for earnings has moved 26.4% north in the same time frame. The favorable estimate revisions reflect the confidence of brokers in the stock.

Given the wealth of information at brokers’ disposal, it is in the best interest of investors to be guided by their expert advice and the direction of their estimate revisions. This is because the path of estimate revisions serves as an important pointer when it comes to ascertaining the stock price.

Impressive Revenue Growth: The Zacks Consensus Estimate for current-quarter revenues is pegged at $1.42 billion, indicating a 72.9% rise from the year-ago quarter’s reported figure. Similarly, the consensus mark for current-year revenues stands at $5.34 billion, implying a 29.2% increase from the prior-year reported figure.

Improving Freight Scenario: Courtesy of the gradual recovery in the economy, freight market conditions improved. This, in turn, helped Landstar improve from the coronavirus-induced slump in the second half of 2020. Evidently, the company’s top and the bottom line increased substantially in each quarter since the third quarter of 2020 owing to robust revenues generated from its primary segment, which is truck transportation. Strong demand in the van truckload business drove segmental revenues.

Higher truck rates owing to tight truck capacity are also boosting the company's performance. Anticipating favorable market conditions, such as strong consumer demand and tight truck capacity to continue, Landstar expects revenues as well as earnings per share to steadily increase in the second quarter of 2021 as well. The company forecasts earnings per share in the band of $2.20-$2.30 for the ongoing quarter. Moreover, it expects revenues in the range of $1.40-$1.45 billion. Further, Landstar predicts both revenue per load and the number of loads hauled via truck in a mid-single digit percentage range, above the sequential quarter’s level.

Bullish Industry Rank: The industry to which Landstar belongs currently has a Zacks Industry Rank of 49 (of 250 plus groups). Such a solid rank places companies in the top 20% of the Zacks industries. Studies show that 50% of a stock price movement is directly tied to the performance of the industry group that it hails from.

In fact, an ordinary stock in a strong group is likely to outperform a great stock in a poor industry. Therefore, taking the industry’s performance into account becomes necessary.

Other Stocks to Consider

Investors interested in the Zacks Transportation sector may also consider Expeditors International (NASDAQ:EXPD) of Washington EXPD, C.H. Robinson Worldwide CHRW and Covenant Logistics CVLG, all presently carrying the same Zacks Rank as Landstar.

Shares of Expeditors, C.H. Robinson and Covenant Logistics have appreciated 35%, 4% and 24% over the past year, respectively.

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